AS Economics: Organisational structures

Hierarchical organisationsAn organisation with multiple layers of management often associated with centralised decision making; which gives most decision makingpowers to the top staff in an organisation.This also entails a chain of command; the sequence of authority down which instructions are passed in an organisation. The span of controlis the number of subordinates directly answerable to a manger.ADVANTAGES: decisions made quickly, without lengthy consultation, and the pattern of responsibility is clear.DISADVANTAGES: referring everything to head office can waste time, can be frustrating and demotivating for people denied the chance toinfluence decisions.HOWEVER, some hierarchical organisations have been delayering and delegating (meaning that people lower down in the chain ofcommand can make decisions.) Another recent trend is decentralisation; decision-making powers are given to local branches within thebusiness, rather than at the head office.ADVANTAGES: delegating responsibility will motivate some people who might appreciate extra freedom; not referring everything to headoffice will save time. DISADVANTAGES: entails a risk of having less contact with subordinates, so can weakensupervision and communication. Requires managers to trust the subordinates, & vice versa.Entrepreneurial StructuresThis is where organisations have a relatively fluid structure in which multilateral lines of communications allow everyone to be in touch witheveryone else. They facilitate innovation and readiness to carry the risk associated with business decisions.ADVANTAGES: decisions can be taken and implemented quickly; staffs are adaptable and flexible towards switching between activitiesaccording to current priorities.

Other pages in this set

Page 2

Here's a taster:

An entrepreneurial culture is likely to have loose lines of authority that may benefit a small business, but this would be a disadvantage forlarger companies.Matrix managementThis involves bringing together teams from different departments, to work on specific projects in which all have relevant expertise.ADVANTAGES: will have flexibility and reach decisions quickly. It can empower team members and encourage creativity, it can also help toimprove communications between departments.DISADVANTAGES: Control by senior managers can be difficult.…read more